Moody's slashes outlook on insurers, cites Obamacare 'uncertainty'

Credit ratings firm Moody's Investors Service on Thursday lowered its outlook for health insurers to "negative" from "stable," citing "uncertainty" swirling around the rollout of President Obama's health care law. (Photo: Thinkstock)

Credit ratings firm Moody's Investors Service on Thursday lowered its outlook for health insurers to "negative" from "stable," citing "uncertainty" swirling around the rollout of President Obama's health care law.

In a new report, the agency said that the outlook for insurance companies is no longer clear because the law's insurance exchanges haven't been attracting enough younger individuals. In addition, Moody's analysts were concerned that the Obama administration has been changing regulations after insurers had already set prices for the year.

"While we've had industry risks from regulatory changes on our radar for a while, the ongoing unstable and evolving environment is a key factor for our outlook change," Stephen Zaharuk, author of the report, said in a statement. "The past few months have seen new regulations and announcements that impose operational changes well after product and pricing decisions were finalized."

The release noted, "Uncertainty over the demographics of those enrolling in individual products through the exchanges is a key factor in Moody's outlook change. ... Enrollment statistics show that only 24 percent of enrollees so far are between 18 and 34, a critical age group in ensuring that lower claim costs subsidize the higher claim costs of less healthy, older individuals. This is well short of the original 40 percent target based on the proportion of eligible people in this cohort."

Moody's also said it was "unclear" whether the impact of the new tax on health insurance policies was properly accounted for by insurers in their 2014 forecasts.